When people say "I want to file bankruptcy" they usually don't know there are two main options with very different outcomes. The choice between Chapter 7 and Chapter 13 can mean the difference between losing or saving your home, between eliminating debt in 4 months or 5 years.
Chapter 7: Quick Liquidation
Chapter 7 is "liquidation" bankruptcy. Most Chapter 7 cases are "no asset cases" because everything you own is protected by California's exemptions. The process takes 3-4 months and most unsecured debts are discharged: credit cards, medical bills, personal loans.
Chapter 7 Requirements: The Means Test
To qualify for Chapter 7, your income must be below California's median income for your family size (approximately $82,000 for one person, $110,000 for a family of 4 in 2026) or you must pass the "means test." If your income is too high, you'll need to consider Chapter 13.
Chapter 13: Reorganization with Payment Plan
Chapter 13 allows you to restructure your debts into a 3-5 year court-supervised payment plan. It's the right option if: you want to save your home from foreclosure, you have debts that can't be discharged in Chapter 7, or your income is too high for Chapter 7.
Home Protection in Bankruptcy
California has a homestead exemption of $300,000 to $600,000 (depending on the county's median value). If your home equity is within this range, it's protected in Chapter 7. If you're behind on your mortgage, Chapter 13 gives you time to catch up while keeping the house.